Examining Documentation for Fraud Detection

B

The correct answer is B. Fictitious refunds.

Fictitious refunds occur when an employee creates a false refund transaction and then diverts the funds for their personal use. One way to detect this type of fraud is by closely examining the documentation submitted with the cash receipts.

When reviewing documentation, a fraud examiner should look for any evidence of fictitious refunds. For example, they might examine the refund request form to ensure that it contains all required information, including the original transaction number, customer name, and amount of the refund. If the form is incomplete or contains incorrect information, this may be a red flag for fraudulent activity.

Another area to examine is the supporting documentation for the refund, such as receipts or invoices. The fraud examiner should verify that the original transaction actually occurred and that the item being refunded was actually purchased by the customer. They should also check to ensure that the refund amount is reasonable and consistent with company policies.

Additionally, the fraud examiner should review any journal entries or other accounting records related to the refund. This can help them identify any unusual patterns or discrepancies that may indicate fraud. For example, they might look for a large number of refunds processed by a single employee, or refunds that were processed outside of normal business hours.

By carefully examining the documentation submitted with cash receipts, a fraud examiner can detect fictitious refunds and other types of fraud. This can help prevent losses to the company and protect the company's reputation.